Weighing in on the subject, Matthew Garrun, Managing Director at Garrun Johannesburg, adds that, in order to grasp how serious the situation is, we need to consider the economic backdrop of the 2023 renewals. Many clients were already dealing with financial stress because of high interest rates and rising prices. Now, insurance companies asking for higher rates and stricter terms are making the situation even tougher. Nowadays, it is more about finding cover at any price, rather than shifting business for a better price.
“The risk appetite among insurers has undergone a seismic shift, and there is now a pronounced reluctance for them to cater to certain industries,” Garrun noted. “Diminishing capacity means that brokers have to think outside the box and scout ‘far and wide’ for insurers that are still willing to take on specific risks; this requires an acute awareness of market dynamics and an innate ability to identify potential opportunities.” And that is where brokers play such an important role. He points out that brokers or intermediaries are required to explain the intricacies of the economic landscape and its effect on insurance markets to their clients. “More than ever, our clients rely on us for clarity and reassurance around their risk exposures, risk mitigation, and risk transfer,” he said. “As insurers make more and more demands, brokers are expected to convey the insurer’s sense of urgency to clients in a diplomatic way.”
Are today’s hard reinsurance markets part of a new normal that brokers will have to navigate on behalf of clients for years to come? “While it is tempting to consider the current reality as the new normal, there is hope on the horizon,” Garrun said. “Global industry experts anticipate a gradual easing, although it is unlikely to be a universal phenomenon.”
Certain geographies and industries will still face challenges and future renewal periods will be characterised by pockets of resistance and relief. “My thoughts turn to the role of brokers in these trying times,” concluded Garrun. “The recent challenges underscore the need for systemic change; traditional risk transfer methods might no longer suffice, pushing brokers to evolve and adapt. Yet, with every challenge comes an opportunity. For the astute broker who is willing to learn, adapt, and grow, these challenging times might just reveal pathways to unprecedented success.”
Earn CPD points by reading Gareth Stokes' full article “Battered and bleeding: Non-life insurance brokers battle one of the hardest renewal seasons on record”, here:
https://www.fanews.co.za/